Missing AVC's

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Prof Chaos

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Hi Apologies if this is in the wrong place but feel free to move it if so.
Looking for a little bit of advice.

My employer has just brought to my attention that AVC's have been deducted from my salary for the last 6+years but both the pension broker and company dont have a record of the avc being set up. So the money has been deducted but has gone nowhere. Normal pension contributions by me an employer have been going through fine.

So they are keen to rectify the situation, they are the ones that found the issue and brought it to my attention, it was during a transition phase when changing payroll companies. I have records of the before and after so it does all line up with a change in payslip format.

Question is what do do from here. They can pay me the lump sum and it would be taxed significantly or they can lodge a lump sum into my pension which would avoid the tax situation until retirement.
The amount is around 17.5K in missing payments (over 200 pm).

I'm assuming I've missed out on significant interest if the avc would have been going through as usual, so should I be adding interest on or how would I even calculate that?
If I was taking a lump sum to salary I guess that interest calculation would be different as it would have been just going in to my current account? They are doing their own calculations but want to make sure I'm not out of pocket.
Any advice greatly appreciated.
 
Do you have copies of forms and correspondence from the time it should’ve been set up? Do you know where the errors lies? Is it with your employer or the pension broker or yourself?

(I had a problem with getting an AVC set up a few months ago. The pension broker had made the error, and I realized there was a problem because payments didn’t come out of my salary as expected).
 
Thanks, nobody has a record unfortunately. The company was in its infancy and things were handled less formally back then.
I have email confirmation of a meeting with the broker in the office on the month the avc's started to appear in my payslips.
The payment is on my payslips since then. I have a feeling changes were made by signing a note in the meeting, but I dont have any record in my email of it. Company and Broker dont have a record either except for the fact the avc started to appear in the payslips.
 
Given that the AVCs have been coming off your salary, you must have filled out the form correctly, and handed them in. The issue then lies somewhere between payroll and the pension company. The markets have climbed significantly over the last 6 years. If they just pay a lump sum of the missing contributions in now, then you lose all that growth. The fairest thing would be to look at the rate of return of the pension fund over the past 6 years and then apply that to the payment. The question then becomes who should be paying the extra amount.
 
I was thinking similar but was doubting myself for expecting too much, I can but try that approach and see where we get. I know money put in vs value of fund (started in 2010), but will see if I can get the breakdown from 2012 when the avc started.
Thanks for the reply.
 
Deleting another duplicated post. I don't know if it's my shaky hand or my laptop's shaky buttons.
 
1 last thing on this, because I will have already paid USC (taken before pension deduction?) on this, and will be paying it again if I get a lump sum, should I be factoring that in too?
 
I think you're best off leaving the money in the pension fund.

Do the AVCs date back to when you first joined the pension? If so, then one suggestion would be to compare the AVCs against the contribution, and then suggest that the payment should be a straight percentage of the value of the fund. E.g. if your AVCs are 50% of the contribution that did go in, and your pension fund is now worth 80000, then your AVCs should be worth 40000.
 
The AVC's started about a year and a half after the fund started, mine and companies contributions (%age of salary) would have grown over the years with wage increases so that wouldn't work.
The avc's were constant bar a small increase after the first 6 months.
But I should be able to calc the %age growth on money paid in vs fund value. And use that percentage on the avc.
Financially makes more sense to keep it in the pension for sure, but could do with the money now trying to save for a deposit.
USC (think PRSI too?) would be an issue either way, I've asked to company is there a refund mechanism with revenue so that I don't pay twice on the same money. Not heard back yet.
 
If it is a dc scheme advise the trustees and request actuary to calculate the required value. If a prsa request the broker to advise and certify the value through the insurance company. To be honest it all sounds odd to me. How was it not seen for so long. Where was the money going after deducted
 
Pension scheme trustees have a legal obligation to remit contributions to the insurance company within 21 days of the end of the month in which they were deducted. In other words, if they deducted contributions on 27 April, they have until 21 May to pay them over to the insurance company. This also applies to PRSA's that your employer has provided for you. This is the law.

The problem is your employers, not yours. They need to get an actuary to calculate how much your contributions would be worth if they met their legal obligations.


Steven
www.bluewaterfp.ie
 
So I've just got out of a meeting with the company, and it has taken another twist.
So its looking like there were never AVC's to begin with. When payroll company changed in Jan 2012 my pension contributions were mislabeled as AVC's. There is only an AVC entry and no Employee entry. The value matches my % contributions. In 2011 and before they were labeled correctly as Employee Pension contributions.
However mid 2014 the labeling was corrected to be employee contributions, but a duplicate avc entry remained. The avc value never increased from that point on, but the contributions did.

So it looks to be a payroll only issue, and it started in 2014 not 2012 like first thought. The meeting with the broker in Jan 2012 seems to be a red herring as it coincided with payroll changes.
Shortfalls is down from 17.5K to 10K.

I have looked through my payslips and all this seems to match. The only way its the bigger of the two was if I had set up and AVC to match my standard contributions and it was messed up from there, but, me, the broker and employer have no record, so it may have been a previous employment that has me doubting.
I should have a better handle on it either way.
 
I'm not following you fully. Was it a misprint on your payslip or is there actual money missing? Have you gone through your bank statements to check that the correct amount was lodged to your bank account each month?

If there was money deducted and not paid to the insurance company, it is the trustees problem.


Steven
www.bluewaterfp.ie
 
Misprint from 2012-mid 2014
Deducted from mid 2014-to present (but not paid in anywhere)
 
Last edited:
Thanks for clarifying.

My original advice still stands then. The trustees are in breach of their obligations to remit the contributions within 21 days of the end of the month in which they were deducted. You are fully entitled to report them to The Pensions Authority. It is their problem to sort.


Steven
www.bluewaterfp.ie
 
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